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CORPORATE RESPONSIBILITY IN
AFRICAN DEVELOPMENT: Insights from an Emerging Dialogue
Maya Forstater, Simon Zadek, Yang Guang, Kelly Yu, Chen Xiao Hong and Mark George The Institute of West‐Asian and African Studies of the Chinese Academy of Social Sciences
In cooperation with The Department for International Development of the UK Government, the World Bank, the Delegation of the European Union, the US Embassy, and Norwegian Embassy and the World Bank Group October 2010 ⎪ Working Paper No. 60 A Working Paper of the:
Corporate Social Responsibility Initiative
A Cooperative Project among: The Mossavar‐Rahmani Center for Business and Government
The Center for Public Leadership
The Hauser Center for Nonprofit Organizations
The Joan Shorenstein Center on the Press, Politics and Public Policy
CORPORATE RESPONSIBILITY IN AFRICAN DEVELOPMENT
INSIGHTS FROM AN EMERGING DIALOGUE
MAYA FORSTATER, DR SIMON ZADEK, PROFESSOR YANG GUANG,
KELLY YU, CHEN XIAO HONG AND MARK GEORGE
THE INSTITUTE OF WEST‐ASIAN AND AFRICAN STUDIES OF THE CHINESE ACADEMY OF SOCIAL SCIENCES IN COOPERATION WITH THE DEPARTMENT FOR INTERNATIONAL DEVELOPMENT OF THE UK GOVERNMENT, THE WORLD BANK, THE DELEGATION OF THE EUROPEAN UNION, THE US EMBASSY, AND NORWEGIAN EMBASSY AND THE WORLD BANK GROUP
OCTOBER 2010
CORPORATE RESPONSIBILITY IN AFRICAN DEVELOPMENT
1
Acknowledgments
This paper draws on a background paper by the same authors entitled Corporate Social
Responsibility and African Development and a subsequent forum on this topic hosted in Beijing
on May 20‐21st 2010 by the Institute of West‐Asian and African Studies of the Chinese Academy
of Social Sciences (IWAAS‐CASS), co‐designed and facilitated by Dr Simon Zadek.
The research and the event were made possible through the cooperation of the Department for
International Development of the UK Government, the World Bank, the Delegation of the
European Union, The US Embassy, and Norwegian Embassy and the World Bank Group.
While any errors are the responsibility of the authors, we would like to thank all of the
participants, listed at the end of the report, who contributed their insights, experience and
analysis during the two day forum in Beijing.
Further details and background paper available at www.zadek.net/csr‐and‐african‐development
About the Authors
Maya Forstater is a researcher and writer on business and
sustainable development.
Dr Simon Zadek is an Associate Senior Fellow of the International
Institute of Sustainable Development, and a non‐resident Senior
Fellow at the CSR Initiative of the Centre for Business and
Government at Harvard University’s Kennedy School.
Professor Yang Guang, is Director‐General of the Institute for West
Asian and African Studies at the Chinese Academy of Social Sciences
Kelly Yu is a practitioner in CSR consultancy and dedicated
professional in sustainability research in China.
Mr Chen Xiao Hong is Director‐General of the Enterprise Research
Institute of Development Research Center of the State Council of the
PRC.
Mark George is a Policy Analyst at Department for International
Development of the UK Government, China.
�
CORPORATE RESPONSIBILITY IN AFRICAN DEVELOPMENT
2
Acronyms
CASS Chinese Academy of Social Sciences
CNPC China National Petroleum Corporation
CSR Corporate Social Responsibility
DFID Department for International Development of the UK Government
DRC Development Research Centre of the State Council of the PRC
DRC Democratic Republic of Congo
DRC‐ERI Development Research Center of the State Council, Enterprise Research Institute
EITI Extractive Industry Transparency Initiative
ESG Environment, social and governance
Ex‐Im Bank Export‐Import Bank
FDI Foreign Direct Investment
FOAC Forum on China Africa Cooperation
FSC Forestry Stewardship Council
GAVI The Global Alliances for Vaccines and Immunisation
GBC The Global Business Coalition on HIV/AIDS
GDP Gross Domestic Product
GRI The Global Reporting Initiative
GTZ Gesellschaft für Technische Zusammenarbeit (German technical cooperation agency)
HSE Health, Safety and Environment
ICMM International Council on Mining and Minerals
IMF International Monetary Fund
ISO International Organisation for Standardisation
IWASS Institute of West‐Asian and African Studies
MNC Multinational corporation
MOFCOM Ministry of Commerce of the People’s Republic of China
NEPAD New Partnership for Africa’s Development
NGO Non‐government organisation
OECD Organisation for Economic Cooperation and Development
PRC People’s Republic of China
RMB Renmimbi
SASAC State owned Assets Supervision and Administration Commission
SME Small and medium sized enterprises
SOE State owned enterprise
UN United Nations
UNDP United Nations Development Programme
UNGC UN Global Compact
USAID US Agency for International Development
WBCSD World Business Council for Sustainable Development
CORPORATE RESPONSIBILITY IN AFRICAN DEVELOPMENT
3
CONTENTS
The Beijing Dialogue: Africa in China ....................................................... 4
The business of development in Africa ...................................................... 6 New investors in Africa ............................................................................................................ 7 Understanding and overcoming the natural resource curse ..................................................... 9
Corporate social responsiblity ................................................................ 13
Learning from experience ..................................................................... 15 Experiences of CSR in Africa ................................................................................................... 15 Experiences of CSR amongst Chinese businesses in Africa ..................................................... 19 Developing and learning from standards .............................................................................. 24
Conclusions ....................................................................................... 35
Conference Participants ....................................................................... 39
Bibliography ...................................................................................... 41
CASE EXAMPLES
Case example: Anglo American’s HIV AIDs Program ................................................................... 17 Case example: Gold Fields Community Development Strategy in Africa ..................................... 17 Case example: Simandou Project ............................................................................................... 18 Case example: A tripartite collaboration in Uganda ................................................................... 23 Case example: CSC9000T ........................................................................................................... 29 Case example: The Forest Stewardship Council in China ............................................................ 30 Case example: China Ex‐Im Bank’s social and environmental standards .................................... 31 Case example: EITI in Liberia and Nigeria ................................................................................... 33
CORPORATE RESPONSIBILITY IN AFRICAN DEVELOPMENT
4
THE BEIJING DIALOGUE: AFRICA IN CHINA
On May 21st and 22nd 2010, in Beijing a diverse group of practitioners from China, Uganda,
Liberia, Nigeria, Ghana, South Africa, the US, and Europe gathered to discuss the role and
experience of business in sustainable development in Africa. Each of the contributors brought
their own experience of working to advance sustainable development through corporate social
responsibility* in Africa. The meeting was a chance to share experiences and build relationships
for ongoing learning.
The forum hosted by The Institute of West‐Asian and African Studies of the Chinese Academy of
Social Sciences (IWAAS‐CASS), in cooperation with the Department for International
Development of the UK Government, the World Bank, the Delegation of the European Union,
The US Embassy, and Norwegian Embassy and the World Bank Group, brought together people
from state owned enterprises and private companies, from multi‐sector initiatives such as the
UN Global Compact, the Extractive Industry Transparency Initiative, the Global Reporting
Initiative and the Forest Stewardship Council
and from government agencies mandated with
overseas development and with the regulation
of businesses.
Why meet in Beijing to talk about corporate
responsibility and the business of development
in Africa? As Director Jing Ning, of MOFCOM,
the Chinese Ministry of Commerce pointed out,
“The economies of China and Africa are
complementary. Since 1999 economic growth
in China and Africa has been correlated.”
The common ground for the meeting was the
recognition that businesses, whether from China and other emerging economies or from
established foreign investors, have a key role to play in African development. However, it is not
“CSR is a universal concept. Companies need to
build awareness of issues and learn from
experience. We need more international
exchanges and summarizing and dissemination
of cases. We can’t solve all problems ourselves.
But we can open up the door and listen to
experience from all other countries”.
Dr Chen Xiaohong, DirectorGeneral, DRCERI
“There has been remarkable socioeconomic achievement in Africa in recent years. There is every reason to be optimistic about the prospects for development in Africa”
Yao Guimei, Deputy Director, Dept. of African Studies, IWAAS, CASS
CORPORATE RESPONSIBILITY IN AFRICAN DEVELOPMENT
5
just the volume of economic activity that determines development, it is also how business is
done which impacts people, the economy and the environment. The challenge and opportunity
is to forge patterns of business in Africa that benefit the continent and its citizens.
This paper builds on the case studies and discussions which animated this meeting, providing
background research and context as well as a set of recommendations and directions to
advance this agenda in the future.
The meeting provided a valuable opportunity for participants from Chinese, African and
Western companies, governments and other organisations to share learning. One of these was
the need to further deepen and broaden the engagement of African businesses, government,
civil society representatives and experts in this dialogue, as well as bringing to the table business
and other actors from other emerging nations with an interest and role to play in Africa’s
development.
[* We use the term CSR throughout this report for simplicity. It may also be referred to in terms of
corporate responsibility, sustainability, business and sustainable development, responsible business
practices, corporate citizenship and environment, social and governance (ESG) issues. While each of these
terms have a different flavour, emphasis and history they cover broadly the same concepts and practices.]
CORPORATE RESPONSIBILITY IN AFRICAN DEVELOPMENT
6
THE BUSINESS OF DEVELOPMENT IN AFRICA
Economies in Africa, and especially Sub‐Saharan Africa, have been growing more rapidly in
recent years than at any time in modern history. Between 2001 and 2008, African economies
grew at an increasing rate, averaging over 6% for the period. In 2010 the average economic
growth rate across the continent overtook both Brazil and India.1 This rate of growth and
development is unprecedented in recent history and has the potential for lifting millions across
the continent out of poverty and moving communities and nations towards self‐sustained
livelihoods and economies.
Challenges to development in Africa remain considerable, as shown by the continent’s uneven
performance as measured against the UN Millennium Development Goals. Eighty percent of
Africans still earn US$2 a day or less. Economies reliant on the export of low value‐added basic
goods are subject to international market fluctuations and weak terms of trade. Rapid
population growth puts pressure on education systems, and weak infrastructure is a barrier to
productivity and upgrading of industry and to interregional trade. Over twenty African countries
have populations smaller than Singapore, and such small economies tend to face greater
challenges for economic competitiveness with unemployment rates exceeding 25% resulting in
endemic poverty and associated problems such as child malnutrition. Environmental problems
are also significant with over 40 African countries challenged by growing water scarcity and
accelerating soil erosion.2
Business has a key role to play in an African renaissance, firstly by investing in the skills and
infrastructure needed for prosperity3. Foreign direct investment far outstrips development aid
in many countries, particularly those with natural resource‐based economic opportunities.4 The
Africa Progress Panel, which involves international thought leaders, and a business advisory
group of major multinationals, recently concluded that the three ways in which business can
make the biggest difference to sustainable development and poverty reduction in Africa are by
“It is vital Africa is able to achieve its potential for development. The really encouraging news is that, on the back of increased levels of investment, of which increasing amounts are coming from China, many parts of Africa really are making impressive progress.”
Sebastian Wood, UK Ambassador to China
CORPORATE RESPONSIBILITY IN AFRICAN DEVELOPMENT
7
supporting the development of a better business environment, ensuring that capital reaches the
many opportunities that exist in Africa and increasing agricultural productivity and food
security.5
NEW INVESTORS IN AFRICA
In recent years traditional investors in Africa have been joined by investors from emerging
economies.6 India’s Reliance Industries, Tata, Oil and Natural Gas Corp and Hindustan
Petroleum, Brazil’s Companhia Vale do Rio Doce, and Malaysia’s Petronas are just a few of the
emerging economy multinationals expanding their operations in the African natural resource
sector, while others are buying agricultural land to expand production in the region.7
The biggest growth in South‐to South trade with Africa has been with China. Between 2000 and
2005, trade between China and Africa increased from US$11 billion to almost US$40 billion with
China becoming the third largest trading partner of Africa (after the US and EU). Trade between
Africa and China reached US$ 106.8 billion in 2008.
Estimates of the scale of Chinese investments in Africa vary, but it is clear that they are growing
rapidly. According to MOFCOM statistics, from 2003 to 2007, annual Chinese investment in
Africa grew from US$75 million to US$1.5 billion.8 The World Bank estimates that Chinese
commitments to finance African infrastructure projects grew from less than US$1 billion per
year in 2001–03 to around US$1.5 billion per year in 2004–05, and reached at least US$7 billion
in 2006, before dropping back to US$4.5 billion in 2007.9
One unofficial estimate suggests that more than 2,000 Chinese companies had established
African branches by the end of 2008, including many small enterprises as well as large state
owned enterprises. The growing dependence of the African economy on trade and investment
with China is suggested by the correlation between economic growth in Africa and China since
1999 (Exhibit 1).
“The economies of China and Africa are complementary. Since 1999 economic growth in China an Africa has been correlated.”
Jing Ning, Director, MOFCOM
“The economies of China and Africa are complementary. Since 1999 economic growth in China and Africa has been correlated.”
Jing Ning, Director, MOFCOM
CORPORATE RESPONSIBILITY IN AFRICAN DEVELOPMENT
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Exhibit 1: Economic growth correlation in China and Africa
[Source: Conference presentation: Martyn Davies, China Africa Network, Gordon Institute of
Business Science]
Chinese companies have investments distributed across 49 African countries, with the majority
focused in South Africa, Egypt, Sudan, Nigeria, Zambia, Tanzania and Algeria. The most high
profile Chinese investments in Africa are focused on resource extraction for oil, uranium and
industrial minerals, and construction of large‐scale infrastructure projects including roads,
railways, and dams as well as public housing, hospitals and sports stadiums. Many of these
investments are supported by grants and loans to governments or ‘soft loans’ to enterprises
from China’s development banks, especially Exim Bank. In some areas Chinese investments
include complex integrated projects on a very large scale (such as combining mining, roads and
hydroelectric power). Others are developing special economic zones in joint ventures with
African governments.10 Chinese entrepreneurs are also active in manufacturing, tourism and
retail, with SMEs increasingly important.11
While Chinese investment in Africa is growing rapidly, it must be remembered that Africa
remains a relatively minor destination for Chinese FDI (most of which still goes to Asia), and
China is still a relatively small player in Africa’s natural resource and petroleum sector relative to
the OECD countries.12 Nevertheless, Chinese investment into Africa provides new long‐term
opportunities for developing Africa’s infrastructure, offering affordable products to consumers
and transferring business models that have already been proved in difficult conditions.13
CORPORATE RESPONSIBILITY IN AFRICAN DEVELOPMENT
9
Chinese companies ‘going out’ for the first time in Africa face some particular challenges that
are unique, because of their own history and the markets and systems that they are embedded
in at home. As Liu Youfa, Vice President of the China Institute of International Studies reflected:
“Chinese companies are late comers to the international market. They have to learn the local
and international rules of the game, at the same time as facing culture shock and competition
from foreign and local competitors. It is a painful learning curve. It is like the people from a
remote village, when they first come to Beijing. They don’t know the traffic rules.” At the same
time, Chinese businesses have experience of rapid economic development from a low base and
have much to contribute to African development. China’s successful development model,
grounded in strong management by a developmental state holds considerable appeal in Africa.
China’s role in building roads and infrastructure in Africa can help to overcome some of the
barriers to economic integration. 14
UNDERSTANDING AND OVERCOMING THE NATURAL RESOURCE CURSE
Africa contains more than half of the world's resources of cobalt, manganese and gold and as
well as significant supplies of platinum, uranium and oil. In 2008 around $1 trillion of minerals,
metals and oil were extracted with commodity exports accounting for 38% of the continent’s
GDP.
Natural resources and mineral wealth can be a powerful driver for development, bringing
investment, creating jobs and public revenues. However many natural resource rich countries in
Africa and elsewhere have suffered from economic underdevelopment, political
mismanagement and conflict. In many cases the discovery of oil or mineral resources has not led
to sustainable prosperity but to devastating political conflict and economic setbacks.
“ When Chinese companies are going to Africa their CSR is positively contributing to solving social problems. They are hiring local people. Many large companies have good environmental protection policy. But they need to quantify and collect data. CSR is still a new concept for Chinese companies. There is a lot of potential.”
Yang Guang, DirectorGeneral of IWAAS, CASS
CORPORATE RESPONSIBILITY IN AFRICAN DEVELOPMENT
10
This has been called the ‘natural resource curse’ or the ‘paradox of plenty’. It is a well studied
phenomenon where countries rich in natural resources have been unable to use that wealth to
boost their economies.15 Key mechanisms are:
• Theft and corruption – Flows of money from natural resources can be more easily
diverted through theft and corruption than those earned through diversified
commerce.
• Economic volatility – Over‐dependence on exporting natural resources leaves
economies particularly vulnerable to the boom and bust cycles. Such economic
volatility prevents sound government planning and results in frequent breaking of
contracts and erosion of the business environment.
• Conflict ‐ Natural resources can provoke conflicts as different groups and factions
fight for their share. Where armed forces are able to gain control of resource
revenues this can prolong conflicts by providing the resources needed to keep it
going.
• Reduced diversification ‐ Large inflows of revenues lead to currency appreciation,
which makes it more difficult to export agricultural and manufacturing goods. While
initially income goes up as natural resources are exported, overtime the overall
output of the economy falls as other sectors fail to grow.
• Poor public policies – Citizens in countries with resource wealth are sometimes
poorly served by their rulers. The ease of raising revenues from natural resource
concessions means that governments have a narrow tax base, weaker institutions
and an even weaker social contract with business and workers. Governing elites are
able to evade accountability to their populations and are not incentivised to pursue
pro‐growth policies.16
• Negative local impacts – Resource extraction often has negative impacts on the
environment, and on people. While oil revenues flow to capital cities, unless local
people are compensated for loss of homes, farmland and fishing grounds, and are
“Many years of exploiting natural resources in Liberia have not made any meaningful impact to the lives of our people. But at the same time there remained good relationships between the government and companies. There was connivance. In the end that is what led to a 13 year civil war.”
Negbalee Warner, Liberia Extractive Industry Transparency Initiative Coordinator
CORPORATE RESPONSIBILITY IN AFRICAN DEVELOPMENT
11
actively involved in the new employment opportunities, human welfare in natural
resource producing regions can fall, even while overall economic productivity of the
national economy rises.
It is a syndrome seen all over the world. It was first termed ‘Dutch Disease’ following the decline
of the manufacturing in the Netherlands after the discovery of natural gas, and researchers in
China also begun to explore the implications of the natural resource curse for Chinese domestic
economy.17
The results of the natural resource curse are that, unless robust public institutions are put in
place to manage natural resource revenues and to achieve development goals the opportunities
and benefits from natural resources extraction are limited and do not enable accelerate broad
based development, at worst they fuel conflict and corruption. However, putting these
institutions in place is difficult.
In recent years a fragile international consensus has emerged to date on the measures
necessary to ensure that natural resource businesses are able to contribute to sustainable
development and overcome the natural resource curse:
1. Environmental and social safeguards and procedures to identify and reduce negative
social impacts, mitigating environmental damage and fighting corruption.
2. Policies and investments to maximise community development. Extractive industries
are by their nature unsustainable, as individual deposits are exhausted over time.
Therefore the sustainable impact of the industry depends on its ability to support the
development of self‐sustaining local economies that can outlast the natural resource
stocks. Extractive businesses are therefore making efforts to maximise sustainable
economic impacts through local job creation, provision of training, local procurement
and involvement in community partnerships to create local infrastructure and build the
capacity of local institutions
“In nations with natural resources, ultimately the question is how can the country gain sustainable welfare from exploiting its natural resources? This is what the business model of responsibility must address – through investment, technology, safeguards and taxes paid to the local government”.
[Li Wen] China National Petroleum Company
CORPORATE RESPONSIBILITY IN AFRICAN DEVELOPMENT
12
3. Revenue transparency. Ultimately sustainable economic growth must be supported
through local institutions and infrastructure, which depend on the effectiveness of
government policies and regulation. Individual businesses can play a key role to support
good government in resource rich countries by championing and complying with
regulations making natural resource taxes and royalties public. 18
CORPORATE RESPONSIBILITY IN AFRICAN DEVELOPMENT
13
Defining CSR
There is no global standard definition of CSR, nor a definitive list of the issues it encompasses. However the
most often cited definitions share a common theme: meeting legal requirements and broader expectations of
stakeholders in order to contribute to a better society through actions in the workplace, marketplace and local
community and through public policy advocacy and partnerships. 19
• “While pursuing economic profits, corporations are held responsible by shareholders, employees,
consumers, suppliers, communities, and other stakeholders. Moreover, corporations have
responsibilities to protect the environment.” Chinese Government20
• “Corporate Responsibility can be defined as how companies address the social, environmental and
economic impacts of their operations and so help to meet our sustainable development goals.
Specifically, we see CR as the voluntary actions that business can take, beyond compliance with
minimum legal requirements, to address both its own competitive interests and the interests of wider
society.”UK Government21
• “The commitment of business to contribute to sustainable economic development, working with
employees, their families, the local community, and society at large to improve their quality of life, in
ways that are both good for business and good for development.” The World Bank22
In the meeting, Yang Guang, Director‐General, IWAAS, CASS related CSR business case to the Confucian
classical philosophy “If you want to benefit yourself, first benefit others”. CSR is not a burden he said but it can
also create benefits “if it creates a better business environment. This is the basis for sustainable growth. Robert
Court of Rio Tinto preferred to use the term sustainable development, but his description was congruent” It is
not optional, it is integral to business. It is crucial to securing our license to operate and to managing risk”.
In general, those from Chinese companies tended to emphasise local community development and the
provision of infrastructure in their description of CSR. Those from Western Multinationals reflected, from their
experience, on the difficulty of achieving significant impact through individual businesses efforts on
community development without broader enabling government policies and institutions. They therefore
tended to focus more on the need for revenue transparency and capacity building of public institutions.
Despite these different perspectives there was broad recognition that while CSR often starts with charitable
donations, the problems and opportunities for sustainable development require a business contribution to
solving social, environmental and governance issues that goes beyond the bounds of ‘charity’
CORPORATE RESPONSIBILITY IN AFRICAN DEVELOPMENT
14
CORPORATE SOCIAL RESPONSIBLITY
Business efforts to address the natural resource curse represent a key facet of the broader
development of ‘Corporate Social Responsibility’ (CSR). Over the past fifteen years it has
become increasingly expected by governments, investors, consumers and local communities
that businesses, particularly the most powerful companies, should go beyond local regulatory
compliance to earn their ‘license to operate’ by demonstrating that their operations provide a
beneficial impact.
Business gains come in terms of better reputation and risk management and the ability extend
into new markets. 23 A study by SustainAbility and the IFC of the business case for CSR in
emerging markets found that key benefits to business come through, higher sales, reduced
costs and lower risks, enhanced reputation, strengthened human resources and improved
access to capital.24 Beyond these individual benefits there is a broader argument that the
interests of business and society are aligned towards the global goal of sustainable
development. Social and environmental goals cannot be achieved without business, and in turn,
that a healthy environment and prosperous society make for a good environment to do
business in.25
These common themes were reflected in the explanations of CSR given by participants in the
Beijing dialogue. “The goal of CSR should be to be a human centred company and achieve
harmonious growth with the local community” said Zhang Weiping, former Chief Economist of
the Chinese oil company CNOOC. Martyn Davies of the Gordon Institute of Business Science
agreed “CSR should not be about charity. CSR should create competitive communities who
benefit from their natural resources”.
While CSR in different countries has emerged in ways that reflect local business cultures, issues
and drivers of change, a common pattern of evolution can be discerned. The first generation of
CSR is generally characterized by ad‐hoc responses to social and environmental issues and
challenges threatening business. The second generation sees companies taking a more
professionalised approach to their impacts, setting commitments and targets and measuring and
reporting on performance. The third generation involves companies aligning their business
strategies more broadly towards sustainable development.26 This means going beyond
controlling negative impacts to building businesses that are more successful in, and contribute
to societies that impact positively on people and the environment.
CORPORATE RESPONSIBILITY IN AFRICAN DEVELOPMENT
15
LEARNING FROM EXPERIENCE
CSR is increasingly becoming a global practice, with businesses based in different countries
tending to pursue approaches with an emphasis that reflects their particular mix of political,
regulatory and financial systems, culture, history and resources.27 A recent survey of business
CEOs internationally, conducted by the UN Global Compact and Accenture found that while
globally 93% of CEOs surveyed said that sustainability issues will be critical to the future success
of their business, In Asia Pacific the figure was as high as 98%, and 97% in Africa.28
EXPERIENCES OF CSR IN AFRICA
The idea that business is part of society, and therefore has community and national
responsibilities is established in the culture, and economic history of many African countries.29
This combined with the influence of multinationals and international institutions such as the UN
Global Compact means that CSR is being carried out both by local businesses and foreign
investors, and is increasingly encouraged by many governments.
Surveys of CSR amongst businesses in Africa have found that the most common approach to CSR
issues is through philanthropic support, in particular focusing on education, health and
environment.30
“Our previous approach was to build a school
here, a road there. We learnt that this doesn’t
make sense. When you build a school, you have
to ask will it have teachers? Will it have books?
What happens when you leave? To work on
that you have to get the government on
board.”
Toni Aubynn, Head, Corporate Affairs and
Social Development, Gold fields Ghana
CORPORATE RESPONSIBILITY IN AFRICAN DEVELOPMENT
16
Exhibit 2: CSR Focus areas of businesses in six countries in Africa
[Source: GTZ]
In Kenya, surveys suggest that the cause receiving the highest proportion of corporate
donations is health and medical provision, and donations are also directed towards education
and training; HIV/AIDS; agriculture and food security; and underprivileged children. In Zambia,
supporting orphanages is the most common activity identified as CSR, followed by sponsorship
of sporting events; cultural ceremonies; education and health provision; and donations to
religious and arts organisations.31
The case studies below highlight the experience of Anglo American in addressing HIV/AIDs in the
workforce, and the approaches taken by Goldfields and Rio Tinto to investing in local
community development.
CORPORATE RESPONSIBILITY IN AFRICAN DEVELOPMENT
17
Case example: Anglo American’s HIV AIDs Program
Anglo American’s HIV AIDs program focuses on employees and aims to break the cycle of new
infections and to ensure that people infected with HIV are assisted in staying healthy and
economically active. A key element is early diagnosis and access to treatment, coupled with HIV
prevention campaigns. Since 2008 the company has extended the HIV prevention, care support
and treatment programme to dependants of employees.
Research into the costs and benefits of the program found that providing anti‐retroviral
treatment reduces employee by 1.9 days per employee, reduced healthcare costs and staff
resulting in a net saving of $93 per month per individual treated. The overall impact of HIV/AIDS
on the Group, including the cost of the ART programme, was calculated at 3.4% of payroll.
Anglo American is also an active member of the global coalition on HIV AIDS and the South
African Business Coalition against HIV/AIDS, working with other companies to share good
practice and raise awareness and support for the issue.
Case example: Gold Fields Community Development Strategy in Africa Gold Fields is the largest gold producer in Ghana. Its direct investments have helped to support
the development of infrastructure in mining communities including roads, houses, schools,
hospitals, the extension of electricity and training opportunities for Ghanaians. To ensure
adequate funding for the company’s social investment and social partnership activities, Gold
Fields established a Trust Fund in 2002. Funding is based directly on production and profitability
through a yearly contribution of US$1.00 of every ounce produced plus 0.5 percent of pre‐tax
profit. This provides over US$1 million a year for social investment activities directed at
Educational, Health and Income Enhancement projects within the communities. Projects are
identified through with community leaders and a community consultative committee and are in
line with local and national government objectives. In 2005 Gold Fields launched a 5‐year
Community Development Programme. The programme was developed to be a high impact,
result focused, sustainable and integrated community development programme that focuses on
economic growth, wealth creation quality of life improvement, and empowerment through
education, capacity building and infrastructure development.
Although the company has developed a five year program, and has a team of development
specialists, it is not seeking to become an expert in development or take on the role of
government. Toni Aubynn said “We cannot resolve every issue, so we know we have to work
with government. Our team has that expertise. But as a business our core business is mining.
We have to partner with the organisations whose core business is focused on development.”
CORPORATE RESPONSIBILITY IN AFRICAN DEVELOPMENT
18
Case example: Simandou Project
Simandou is a iron ore mining project located in Guinea which is being developed in partnership
between Rio Tinto and Chinalco. It is in the final stages of exploration and feasibility studies that
have taken twelve years. Mine, railroad and port construction is expected to commence in
2010 with production starting in 2013. The Simandou project aims to build enduring
relationships with neighbouring villages and communities that are characterised by mutual
respect, active partnership and long‐term commitment. This is in line with Rio Tinto policies
laid out in its ‘The way we work’ policy and the requirements the IFC.
The project is working with neighbouring communities, the government and NGOs to
understand the social, environmental and ecological issues in the region and develop a plan for
sustainable development to ensure that benefits brought to the local community remain after
the eventual closure of the mine. Key elements of sustainable economic impact identified,
include:
• Economic growth – capital investment through infrastructure and the payment of taxes and
royalties.
• Revenue Transparency – support of the Extractive Industries Transparency Initiative.
• Indirect economic benefit – rehabilitation/development or railway routes and the
expansion/development of port facilities will allow for other producers and communities to
benefit from investment.
• Small and medium enterprise development – The project is investigating the development
of spin‐off industries and small and medium enterprises.
• Employment and skills – In order to create local jobs; the project has been investing in
education to raise the level of literacy of the local population, and with it the potential for
students to enter into more further education.
• Community development ‐ building the capacity of local institutions to address
community‐identified priorities.
• Environmental Protection – minimisation of impact to the environment from mining
operations
In order to progress this broad agenda and enable economic transformation in Guinea, the
project is seeking to form a wide partnership with local actors. It will need to meet Guinea’s
need for speedy development, as well as the highest international environment, social and
governance standards. It will also be a learning opportunity for Rio Tinto and Chinalco working
together towards sustainable development.
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EXPERIENCES OF CSR AMONGST CHINESE BUSINESSES IN AFRICA
The practice of CSR amongst Chinese enterprises is growing. A previous study “Responsible
Business in Africa ‐‐ Chinese Business Leaders’ Perspectives on Performance and Enhancement
Opportunities”, involving the co‐authors of this report investigated the key drivers and features
of ‘CSR with Chinese Characteristics’.
The study surveyed perceptions amongst business leaders of a range of Chinese enterprises
operating in Africa found that almost all were familiar with the concept of CSR, and the need to
be seen to contribute to, and meet the expectations of their host communities. They general
described CSR in terms of contributing to local economic growth and job creation, complying
with local laws and caring for the environment, and making philanthropic donations to support
schools and hospitals.32
The study noted that the key drivers behind the recent growth in CSR activity amongst Chinese
companies are:
• Government support for CSR. In contrast to the West, where the pressure for CSR has
primarily been driven by civil society, for Chinese companies it is driven in particular by
government as a stakeholder. The current administration is actively pursuing CSR, as
a strategy for promoting the implementation of the concept of “Scientific
Development,” and “Harmonious Society.” In 2008, SASAC published “CSR Guideline
for Central State‐Owned Enterprises” The guidelines enjoin state owned enterprises to
strive for four goals: long term business success and payment of taxes, ethical
behaviour, safeguarding workers’ rights and interests; protecting the environment, and
contributing to social welfare through philanthropic spending. 33
“It is a myth that Chinese companies have
particular problems and concerns in Africa. Of
course, there are good companies and those
that are not so good, as there are in Europe
and North America, and across Africa. But the
real lesson is that good companies have much
in common whether they are African, Chinese,
Brazilian or British. And it is this good practice
that must be recognized, celebrated and
advocated for others.”
Sebastian Wood, UK Ambassador to China
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• Adoption of international standards, and involvement in international collaborations.
While Chinese companies have been wary of joining or adopting many of the
multi‐sector collaborations and standards on CSR, there has been increasing adoption
of process based standards such as the GRI Sustainability Reporting Guidelines, and ISO
environmental management system standards. In addition, by 2008, nearly 200
Chinese companies had joined the UN Global Compact, accepting its ten principles on
sustainability, and making it one of the top 6 countries in terms of participation.
• Establishment of CSR training and skills development programmes. Since CSR is still
new to many in China, the demand for ongoing training continues to rise. Training
courses are already being conducted by institutes such as the International Labour
Organisation (ILO), German, Swiss and Swedish technical cooperation agencies, and the
WorldWide Fund for Nature (WWF).
While Chinese CSR has initially focused on domestic concerns, it is also expanding to overseas
operations, including in Africa. This has been driven by the same factors driving CSR at home,
but also by the need to respond to local stakeholder expectations and the practices and policies
of joint venture partners. CNPC, Sinopec, and other Chinese multinational companies included
overseas performance as part of their annual CSR reports, while SinoSteel in 2008 was the first
Chinese company to publish a dedicated report on their African operations.34 In 2007 MOFCOM
held a meeting with 67 Chinese companies
operating in Africa, in which it encouraged them
to establish the awareness of CSR and develop
harmonious economic relations with Africa. Key
operational guidelines were to provide quality
products and services; improve communication
and exchanges to support each other in risk
prevention and sustainable development;
advance local employment, abiding by the law
and international business ethics; protect the
environment, respect local culture and customs;
and give to Africa through philanthropy in
education, healthcare and environment.35
In common with the experience of CSR around
the world, larger Chinese businesses, whether
SOEs or major private companies have tended to
have a greater incentive and capacity to address
CSR‐related issues than smaller enterprises. In general larger companies are seen as operating
comparably with other multinationals; however both Chinese companies and local stakeholders
often complain that smaller and private companies in particular do not comply with local
regulations.
“In our study visit to 15 countries in Africa we
found that most Chinese investors were in
harmony and compliance with local community
and were investing in charity programs. Some
companies are polluting in the environment and
need to improve their practices. But some are
doing good. CSR was not born in China, but goes
back to the Confucian idea ‐ If you want to
benefit yourself, first benefit others.”
Yao Guimei, Deputy Director, Dept. of African
Studies, IWAAS, CASS
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Chinese companies at the conference shared their experience and approach to contributing to
development in Africa. Zhang Weiping, former Chief Economist of the Chinese state owned oil
company CNOOC shared how the company supports local healthcare and social projects, for
example training local people, donating power equipment, building wells and building and
donating equipment to local schools in Guinea and Kenya. General Manager from
construction company CITIC explained that the company provides healthcare free of charge to
villagers along the expressways it is building in Algeria “We dig wells, build roads and bridges.
We build schools. We have donated money to the government to develop an institute for
managing major projects.”
Participants reflected candidly on their experience of developing CSR policies and practices in
their operations in Africa. Jing Ning, Director of the Department of West‐Asian and African
Affairs of MOFCOM noted that while all contractors to assistance projects are compelled to
comply with local norms for labour relations and environmental production, often business
imperatives and cultural barriers can be obstacles to greater economic benefit. “Many
companies take Chinese engineers with them to speed up the project. But they don’t speak the
local language. Then it becomes difficult to train local workforce” he said.
Chinese companies spoke of the need to work with local partners and build up experience of
working collaboratively with civil society organizations. Dr Chen Xiaohong, Director‐General,
DRC‐ERI highlighted the relationship between local and national governments in Africa, which is
different from what Chinese companies are used to at home “The government cannot just step
in and tell companies everything to do, and Chinese companies often don’t know how to deal
with the conflict between different levels of government”.
As latecomers to global expansion Chinese companies are often pursuing opportunities in the
riskiest and most difficult business environments, and they also lack international experience in
working with civil society organisations. Jill Shankleman, in her study of the role of Chinese
enterprises and natural resources concludes that major Chinese corporations are at a stage
“comparable to that of their western counterparts in the late 1990s in terms of steps to improve
social and environmental performance…they are making commitments, spending money on
environmental improvements and social projects, and celebrating their successes …however they
have not yet developed detailed policies or procedures …. They are supporting philanthropic
projects, but in most cases without a clear understanding of how to ensure the acceptability or
sustainability of those projects, and have not yet built up the internal expertise to fill these
gaps.”36
Many of the presentations and discussions during the Beijing Dialogue in many respects
matched this description. However they also emphasised the advantages that Chinese
companies are able to offer for economic development, through their efficiency and lower cost
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structures. The Chinese way of working, where staff including managers, technicians and
labourers live and work on the site and share basic living conditions saves time and costs and
enables managers to rapidly respond to challenges as they occur. 37 Chinese companies, and
groups of companies are also able to offer end‐to‐end solutions combining infrastructure
development with natural resource extraction, again giving them a competitive advantage in the
most difficult of operating environments.
Some of the companies described an evolving CSR approach which was gradually bringing the
management of corporate social responsibility closer to the core business, and developing
management capacity and systems. Chen Xiaowei, General Manager of Sinosure, (The China
Export & Credit Insurance Corporation) reported
on how the company has integrated
environmental, social and governance criteria
into their risk assessment processes as part of
their business procedures for managing and
reducing risk “this is just another part of our
business process, social responsibility for us
means ensuring that enterprises are able to
operate on a stable basis, and that the support
from us is sustainable. It is important to review
and address social and environmental risks first,
so the project is not stopped by emergencies.”
The Chinese enterprises, think tanks and
government institutions at the Beijing Dialogue were open that CSR is a new development, and
that they are still developing capacity, expertise and systems. They called on domestic and
international institutions to help support learning and development of CSR capacity in China.
One key example highlighted of such a learning partnership was the collaboration in Uganda
between Chinese, Norwegian and Ugandan business associations. Martin Kasekende, the
Chairman of the Federation of Ugandan Employers and Liu Hansong, Director, Employer
Department China Enterprise Confederation described the tripartite cooperation developed
with Chinese businesses and Norwegian support, to improve performance on environment,
health and safety.
“Chinese enterprises must learn local rules on
corruption and labor, help to set international
rules, learn how to follow these rules together,
have better relations with local communities.
This is why we are collaborating with the
Federation of Ugandan Employers. “
Liu Hansong, Employer Department China
Enterprise Confederation
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Common lessons that emerged from discussion of the experience of Western, Chinese and
African companies include: 38
1. Engage and collaborate – engage and involve local people in a meaningful way, so that
company activities are responsive to their concerns, are recognised and are designed
for sustainability and long‐term hand over to communities.
2. Manage CSR like you mean business – CSR needs to be managed professionally and as
an integral part of business operations. This means building capacity, setting clear
goals, metrics and targets and managing performance.
3. Be transparent and communicate policies, contributions and success – clear and open
communication, aimed at a wide range of stakeholders, not simply government officials
is crucial to gaining recognition and benefits from CSR.
4. Coordinate with national and local development goals– CSR should go beyond ad hoc
philanthropic donations, but it should not usurp the role of government. Critical is to
Case example: A tripartite collaboration in Uganda
In Uganda a tripartite coalition has been developed between the Federation of Ugandan
Employers, the China Enterprise Confederation and the Confederation of Norwegian Enterprise
Labour Organisation.
Established in 2007, the main objective of the coalition is to assist Chinese companies doing
business in Uganda to address challenges related to labour relations, decent work, CSR and
health and safety. The initiative developed following new labour laws issued in Uganda in
2006. The employers’ federation developed a simple guide translating these laws into Chinese
and identified a broader demand from Chinese employees in the manufacturing and hotels
sector for further guidance, and for a forum to help bridge cultural and language divides.
Seminars and field visits to companies have been carried out both in China and in Africa.
Through the sharing of experiences and best practices the project has developed a set of
guidelines and best practice case studies aligned to the UN Global Compact principles, for doing
responsible business in Uganda.
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work with local and national governments to contribute to overall development
priorities and build the capacity for government to support broad‐based development.
DEVELOPING AND LEARNING FROM STANDARDS
As companies build up experience of CSR, the development of standards has emerged as a
powerful tool for codifying and sharing learning and ensuring a common standard of practice.39
Over recent years a range of standards have been developed by businesses, governments and
NGOs working together to offer guidance and common concepts, indicators and performance
frameworks.
These standards have been the key mechanism
for scaling up from individual CSR action to
broader action. It is argued that this approach
has helped to advance the practice of corporate
responsibility, providing clarity and a common
basis of rules and braking unproductive
stalemates between businesses and their
critics.40
A number of these standards are particularly
relevant to business and development in Africa,
in relation to natural resources. These include
the Extractive Industry Transparency Initiative, the Voluntary Principles on Security and Human
“If you want different groups to talk about
common problems they need a common
language, if you want companies to
incorporate issues into management systems,
you need indicators, and confidence that they
are the right indicators. If you want social
feedback loops from markets they need
comparable information. Therefore you need
standards on performance and reporting. “
Sean Gilbert, China Representative,
Global Reporting Initiative
Resettlement is a key issues. There is different
legislation in every country we operate in. But
that is over complicated and also does not meet
our values. It is simpler and more effective for us
to apply one standard. We use the IFC standard.
But we don’t always manage it properly. We are
still learning how to do consultation. In Limpopo
we had an independent review of what went
wrong and published a review on our website.
Hugh Eliot, Anglo American
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Rights, the Kimberley Process, the Forest Stewardship Council Principles, the Equator Principles
(and World Bank environmental and social standards) and the UN Global Compact.
Exhibit 3: Key CSR Standards and initiatives addressing the natural resource curse.
• Equator Principles offer a framework for environmental and social risk assessment of
project finance, based on the Environmental and Social Standard of the IFC.
• Extractive Industries Transparency Initiative (EITI), launched is a global standard that
promotes revenue transparency. It provides a robust yet flexible methodology for
monitoring and reconciling company payments and government revenues at the
country level. The process is overseen by participants from the government, companies
and national civil society.
• Forest Stewardship Council, set up in 1993 is an international, non‐governmental
organization dedicated to promoting responsible management of the world’s forests. It
runs a global forest certification system that allows consumers to identify, purchase
and use timber and forest products produced from well‐managed forests.
• Global Reporting Initiative set up in 2000 to develop, steward and encourage adoption
of generally accepted guidelines for public reporting on sustainability performance.
• International Council for Mining and Minerals (ICMM) Sustainable Development
Framework, developed by an industry group provides a framework of principles for
sustainable development, reporting and independent assurance for mining companies.
• Kimberley Process (KP), launched in 2003, certifies diamond supply chains to ensure
that legitimate supplies can be distinguished from ‘blood diamonds’ that finance
conflict.
• UN Global Compact (UNGC) establishes 10 broad principles covering environment,
human rights, labor, and anti‐corruption, and provides guidance, tools, learning and
collaboration networks to assist companies in meeting and communicating on these
principles.
• Voluntary Principles on Security and Human Rights (VPs) launched in 2000 set out a
standard to ensure that security forces protecting extractive projects do not intimidate
or harm local people.
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While standards have often been developed through the championing of Western governments,
multinationals or NGOs, they are increasingly being taken up by leading businesses from
emerging economies, as a way to meet consumer demand, and enable upgrading to world class
business practices.
The UN Global Compact is one of the most widely adopted CSR initiatives in Africa. Local
networks have been established in 11 African countries. These networks have tended to
prioritise the human rights and labour standards dimensions of the UN Global Compact’s ten
principles in their activities.41
Exhibit 4: UN Global Compact Membership Across Africa
0
5
10
15
20
25
30
35
40 KenyaTunisiaSouth AfricaNigeriaEgyptZambiaGhanaMauritusSyriaMoroccoMozambiqueTanzaniaMalawiCameroonNamibiaMadagascarUgandaSenegalSudan
“There needs to be local ownership of standards, not colonialism in terms of
universal standards. Countries like China
should have its own rules and principles. We
need to nurture diversity in this area. Levis and
Nike had their own standards, which
contributed to competition in the market. Let
Chinese players develop their standards and
competition before you can talk about
convergence.”
Liang Xiaohui, CNTAC
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[Source: UNGC website, consulted April 2010]
While international standards for CSR offer clarity and an established basis of expectations, they
are not always a perfect fit with local needs and need to be adapted and cevolved, so that they
are effective and useful, and do not become barriers to entry for new investors.
African governments and organisations have therefore also begun to develop their own CSR
principles and standards. In 2008 the Executive Council of the African Union (AU) announced
its decision to facilitate the private sector’s critical role in promoting Africa’s regional and
continental integration agenda. The Government of Nigeria is attempting to pass legislation to
make a minimum level of philanthropic CSR contributions mandatory for businesses in the
country. The bill also proposes the establishment of a commission, whose duties would include
providing standards, integrating social responsibility and international trade issues, conducting
research, brokering partnerships between businesses and local communities and ranking of
organisations according to their CSR initiatives.42 Kenya, Mauritius, Morocco, Ghana, South
Africa and Zimbabwe nominated their national standards bodies to play an active role in
developing the ISO 26000 SR Standard, while
industry and expert delegates from Nigeria, Côte
d’Ivoire and Cameroon have also participated in
the working groups.43
In 2010 a group of national leaders and opinion
formers came together to develop the Monrovia
Principles, a made‐in‐Africa set of CSR guidelines.
Delegates including President Ellen Johnson
Sirleaf, President of Liberia, John Kofuor, Former
President of Ghana Luisa Dias Diogo, Prime
Minister of Mozambique, Mozambique; Dr
Sydney Mufamadi, former Minister of Provincial
and Local Government of South Africa and
Patrick Mazimhaka, Former Senior Presidential
Advisor to the President of Rwanda and Former Deputy Chairperson of the African Union
Commission. The Monrovia Principles emphasise CSR as a growth partnership between
business, government and civil society, aiming at encouraging entrepreneurship and inclusive
economic growth. However they also call for businesses to contribute at least 0.7 of their
profits to CSR activities, paralleling the donor Official Development Assistance target, and
In developing the SASAC CSR guidelines we
borrowed from international organizations and
standards and linked with the specific context of
china. Before the SASAC decree, state owned
enterprises were each doing their own thing on
CSR. They were mainly concentrating on
donation of charitable funds. After the
publication of this decree they have developed
action plans and management systems and
capability”
Hou Jie, SASAC
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suggesting a view of CSR that remains concentrated on philanthropy rather than core business
practices.44
Chinese companies and industry sectors too are responding to international standards, whether
through individual adoption, developing their own standards or seeking to engage with and
influence existing standards.45 Presentations at the Beijing Dialogue illustrated each of these
approaches.
• Adopting standards: Many companies in China are using international standards such
as the UN Global Compact principles and the GRI standards for reporting and the ISO
standards. China’ Industrial Bank has adopted the Equator principles for project
finance. “We found that these principles consistent with our own policies. We have
made some revision of the principles, and developed our own tools that fit with them”
explains Su Tingting of the Legal and Compliance Dept, of the Industrial Bank. They
found that using the Equator principles enabled them to offer their customers a strong
framework for improving their environmental practices and social responsibility,
without costing more than existing environmental impact assessment processes they
were already doing.
• Developing new standards: SASAC, the Council for Textile Industries and China Ex‐Im
bank have each developed their own standards for CSR, drawing on and adapting
international approaches.
• Influencing existing standards: The Forest Stewardship Council standard and approach
is being adapted and adopted in China. A multi‐stakeholder group of 150 stakeholders
housed within the Ministry of Forestry defines performance indicators for China based
on local input.
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Case example: CSC9000T
CSC9000T is a standard for responsible production in the apparel industry. It was developed by
the Responsible Supply Chain Association (RSCA) of the China National Textile and Apparel
Council (CNTAC) in 2005, and was the first CSR management system developed in China.
The thinking behind the CSC9000T standard is that while there the model of imposed
compliance through international standards and audits, was not successful in ensuring that
factories continuously improve and manage CSR performance themselves. CSC9000T is based
on Chinese norms and regulations, and aims to give Chinese suppliers the guidance they need to
proactively address CSR challenges in a way that takes into account the demands of the Chinese
operating environment. The system enables factories to focus on long term continuous
improvement rather than a one‐time audit.
In promoting CSC9000T, CNTAC is seeking both to help Chinese suppliers become more
proactive regarding CSR improvements but also to help Western audiences better understand
Chinese suppliers.
Since its development the standard has evolved to include environment and fair competition
principles. CNTAC is now building up the capacity for grading and assessment, and also
working with other standards organizations on prospects for mutual recognition.
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Case example: The Forest Stewardship Council in China
The FSC is an independent, non‐governmental, not‐for‐profit organization established to
promote the responsible management of the world’s forests. It is a multi‐sector organisation
which brings together organisations from the North and South to define environmentally
appropriate, socially beneficial and economically viable forest management standards, and
controls. In China over 1.3 million hectares of forest and 1,250 companies are certified to FSC
standards.
As part of the FSC’s effort to decentralize its activity to the national and regional levels it has
established the FSC China‐National Initiative Process to develop a forest certification standard
compatible to forestry conditions in China. The FSC China ‐National Initiative Process is not
subordinate to the FSC, nor is it its agent.
The FSC China National Initiative aims to help realize a mutual recognition between China’s
national forest certification scheme and and international standards. It seeks to encourage the
involvement of China’s stakeholders in forest certification and assist in the development of
national forest certification standards, as well as promote the awareness and operationalisation
of sustainable forestry in China.
The FSC China National Initiative Process has 107 members from government departments,
academies, universities, professional associations, forest management units, timber processing
enterprises, non‐governmental organizations, and the news media. It is governed by a Council
elected by all the Initiative’s members and evenly divided between environmental, social and
economic chambers.
The FSC has also signed a Memorandum of Understanding to collaborate with the Certification
and Accreditation Administration of the People’s Republic of China (CNCA) to promote the
development of forest certification in China. This involves information exchange, training,
technical collaboration and coordination in the development of certification standards
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Some CSR standards are not designed directly to be adopted by companies but to provide a
framework which governments adopt into law and companies then comply with as part of the
conditions of their license to operate. This is how the Extractive Industry Transparency Initiative
Case example: China Ex‐Im Bank’s social and environmental standards
The Export‐Import Bank of China was established in 1994, as a wholly owned by the government
bank reporting to the State Council. The bank’s role is to promote exports and investment by
providing export credit, international guarantees, loans for overseas infrastructure and official
lines of credit. As such it is the largest stakeholder of ‘China inc’ in Africa.
Since 2004 China ExIm Bank has required its borrowers to submit to internal review and comply
with local laws of the host country. The policy states that ‘projects that are harmful to the
environment or do not gain endorsement or approval from environmental administration will
not be funded’. It stipulates that ‘once any unacceptable negative environmental impacts result
during the project implementation, China Exim Bank will require the implementation unit to
take immediate remedial or preventive measures. Otherwise, they will discontinue financial
support'. In 2007 China Exim Bank issued more specific guidelines on social and environmental
impact assessment. The guidelines require projects to comply with host country policies – but
not international standards – regarding environmental assessment, resettlement and
consultation. China Exim Bank takes an active role in monitoring environmental impacts
throughout the project cycle, and reserves the right to cancel a loan if environmental impacts
are not adequately addressed.
In developing their own principles China Exim bank and materials that they have developed to
guide credit officers and management, they drew on others experience, including the Equator
Principles. They also learnt their own lessons in developing an in house culture of risk awareness
and responsibility. “We had to understand CSR and sustainability not as trying to deal with bad
effects of any project financing, but a way of understanding and controlling risk.
Ex‐Im has not become an Equator principles bank, but says Zhao Changhui, Chief Analyst of
Country Risk Management, Exim Bank there is a “moral imperative to study these principles at
the level of practitioners. The concept may be new but the values have been there all the time.
We need to crystalise it into the language of the Chinese characters. Senior executives may be
frightened away by these principles or that principles. We need to simplify it and educate the
corporate culture to develop a better stronger and more reputable china.”
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operates. Twenty‐six resource rich countries are implementing the EITI. These governments
publish independently audited accounts of the revenues paid by extractive industry companies
and received by governments. Many of the world’s largest oil, gas and mining companies also
support the EITI process and submit an
International‐level Company Self‐Assessment
Form.
To date, neither the Chinese government nor any
Chinese companies are formally supportive of the
EITI, although several companies have reported as
part of nationally mandated frameworks.
Considerable surprise was voiced by some
Chinese participants that what they had
conceived of as a voluntary initiative in fact
involved African and other governments and national legislation in several African countries.
Jonas Moburg of the EITI Secretariat, Negbalee Warner, National Coordinator of the EITI in
Liberia and Humphrey Asobie, EITI Chairman in Nigeria outlined how the EITI framework had
been adapted and implemented by governments in Africa.46
“It was not that long ago that bribes
were tax deductable in Sweden. We have
collective responsibility that things are
done differently in the future. EITI is
not a solution but it is a start. Just as
companies start cautiously engaging
with communities, countries have to
start cautiously.”
Jonas Moburg, EITI
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Case example: EITI in Liberia and Nigeria
Liberia's natural resource wealth has long been at the centre of the country's conflicts and
corruption. In 2005, the new government led by President Ellen Johnson‐Sirleaf vowed to
ensure national growth, development and reconciliation, through better transparency in how
revenues from the extractives sector are managed. 47 The EITI offered a strong basis for
implementing these principles, although it had to be adapted to the local situation, for example
in Liberia the EITI has been extended to forestry as well as to the mining sector.
In Nigeria it was the oil company, Shell, which started first to publish what it paid to
government. Nigeria established a national EITI stakeholder group in 2007 and passed a law to
enforce it. The NETI act makes EITI disclosure mandatory, ensuring transparency between oil
companies, government and citizens. NEITI includes process audits, which check not only
whether funds have been received, but whether payments due have been calculated correctly
on the basis of production.
The benefits of implementing the EITI in both countries have been:
• Providing an opportunity for society to know clearly what companies have paid and
what governments have received. Periodic independent audits have opened up a
hitherto opaque industry to public scrutiny. If what is reported as received is
materially different from what is reported as then the tax can be recovered. For
example in Nigeria $1 billion of revenues were recovered in the first year and $2.8
billion in the following year.
• Improving community and public relations for companies. When communities know
what companies have paid they are less likely to resort to violent conflict against the
company. The opportunity to pursue these issues through civic interrogation of
public officers provides a social safety valve. For companies it also gives a security that
if the government changes, there is a public record of payments made and received.
The national coordinators in both Nigeria and Liberia stressed that the report itself is not an
end. What it does is to enable a conversation between the people and the government, about
how the amounts received have been used. For this to be effective there is also a need to build
the capacity and empowerment of civil society to effectively use the disclosures to hold
government bodies to account for spending.
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Participants reflected on the usefulness of international standards in providing guidance,
models and tools as well as ensuring international recognition, and the need for them to
continue to evolve. Many stressed the need for international models to be adapted for Chinese
companies’ own contexts.
This reflects a strong concern that international standards, while not designed to create
distortions or favour incumbents, may in effect, act as barriers to new entrants doing business
in Africa. This impacts especially in the most difficult operating environments where Chinese
companies have the highest competitive advantage and opportunity to compete as newcomers.
In these situations Chinese companies are concerned that CSR standards set to meet the
working practices of Western companies will directly undermine their own business strategies,
and ultimately their ability to create employment, build infrastructure and benefit local
economies.
International development agencies and standards institutions confirmed that there was little
robust research on this matter.
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CONCLUSIONS
The discussion amongst practitioners highlighted how responsible business practices are making
a positive contribution to development in Africa. However, as many pointed out, there is still
much to learn to ensure that the exploitation of non‐renewable resources provides a basis for
sustainable development.
Chinese companies have ‘gone global’ at an
earlier stage in their home country’s economic
development than other nations and face a steep
learning curve on how to manage social and
environmental performance in relation to
different operating environments, and
stakeholder expectations in Africa. They are
working to build up capacity for environmental
and social performance management
Participants from all sides welcomed the opportunity to learn from the experience of others,
and recognized the benefits of adapting international best practices and standards, at the same
time as contributing their own experience to shape these evolving standards. However there
was real concern that CSR standards, could, if they are not responsive to the contexts and needs
of new investors become barriers to the very development they seek to promote.
“Chinese companies can gain from higher
awareness of CSR and learning from
experience. We can open up the door and listen
to experience from all other countries. We
need to participate in the drafting of
international rules and norms, and be
responsible for the rule making process and for
promotion so that others understand the CSR
practiced by Chinese companies.”
Mr Chen Xiaohong, DirectorGeneral, DRCERI
“CSR must be integrated into business Many
Chinese companies do not yet have CSR
department. However they are already doing far
more in the area of CSR than they are letting
people know. We have to both strengthen the
publicity, and improve the CSR performance.”
Yang Guang, DirectorGeneral, IWAAS, CASS
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At the same time Chinese CSR is not simply a late adoption of a Western business model. As our
previous study highlighted, business leaders in China view CSR through an economic
development lens, and stress the efficiency and lower cost structure of Chinese enterprises, as a
key difference in enabling them to bring development benefits to new markets.
One key difference between Chinese and western conceptions of CSR concerns the extent to
which they are willing to consider whether business practices reinforce or undermine local legal
and political institutions, particularly in institutionally weak countries. While the Western model
for overcoming state corruption in managing natural resource revenues is based on encouraging
transparency, the Chinese model has tended to rely on direct provision of public infrastructure.
This is aided by Chinese companies’ access to low‐cost and long‐term capital. However, there
is long experience of foreign funded infrastructure projects being developed in Africa, which do
not meet local needs, and are not supported with maintenance, which remains a challenge to
this model of business in development.
The discussions highlighted several areas where future research and dialogue would be helpful:
• Research on mechanisms for securing positive development benefits from extractive
industry projects. The ‘Chinese Model’ of natural resource based development, such as
practiced in Angola and Sudan – where resource revenues are directly used to finance
infrastructure offers an alternative approach to the ‘International Model’ of transparency
and aid conditionality. Both approaches have their challenges and strengths. With Chinese
companies and government aid agencies now
significant players in resource‐rich countries, it
is crucial that CSR developments around
resource governance are broadened to include
the experience and approach of Chinese
businesses.
“Nurture the will for long term investment in
Africa. Do not point fingers, but try to
understand. CSR is a universal concept. All these
activities and cases need to be summarized and
disseminated. We need to build an environment
where business people feel motivated to invest in
sustainable development in Africa.”
Jing Ning, Director, Department of West‐Asian
and African Affairs, Comprehensive Section,
MOFCOM
CORPORATE RESPONSIBILITY IN AFRICAN DEVELOPMENT
37
• Clearer exposition of the role of governments (especially African governments) in
advancing standards with voluntary and mandatory characteristics. Participants stressed
that ultimately there is not a choice between ‘The International Model’ of CSR, and ‘The
Chinese Model, but an imperative for the private sector to contribute to ‘Africa Models’ of
development, embedded in national priorities
and supporting the role of government. CSR in
Africa can draw on international standards but
must reflect local priorities of and capacity to
enable and regulate private sector development.
• Research on the CSR experience and practice of
Chinese companies to develop Chinese CSR
standards beyond normative frameworks.
Chinese organisations including SASAC and the
China Textiles Association highlighted the need to
develop their CSR guidelines beyond offering
normative principles to providing a set of
evaluative frameworks to understand degrees of
compliance and improve standards through learning. This could build both on the real‐time
learning of Chinese companies, and transferable tools, indicators and frameworks from
existing standards.
• Development of resources and networks to enable SMEs to learn about and apply
responsible business practices in Africa. While CSR is becoming well established amongst
large SOEs, many Chinese companies in Africa
are private ones. Provision of education and
training through the Embassy and Office of
Commercial Affairs and through collaborations
such as the one in Uganda would be valuable to
advance CSR beyond the leaders. This is likely to
include translation and training on local rules, as
well as on key Chinese and international norms.
One key route for establishing these networks
and norms would be through the procurement
conditions for contractors on FOCAC and other
“ Government agencies should encourage
Chinese organisations to participate for example
as experts in working groups, and providing
written feedback. Join governance bodies.
Secretariats would be willing to share
information. Look at common values. Don’t look
for differences first. China should create models
of best practice and introduce them out. “
Sean Gilbert, China Representative, Global
Reporting Initiative.
“We are encouraging state owned enterprise to
engage in international dialogue and disclose to
stakeholders. We will identify good performers
who can share their performance, we will then
be able to work out more detailed guidance.
What the central SOEs are doing is very
influential to private business. Central SOEs can
also learn from the experience of private
business.”
Hou Jie, SASAC
CORPORATE RESPONSIBILITY IN AFRICAN DEVELOPMENT
38
government funded projects.
• Greater involvement by Chinese companies in
key international standards and learning
initiatives to share learning and accelerate
development of effective approaches.
Partnerships such as the Global Business
Coalition on HIV Aids, the EITI, and the UN
Global Compact, and the ICMM should
continue to reach out to Chinese companies
and involve them in ongoing development.
There are awareness raising opportunities, to
help companies understand the common
points between tools and priorities within
China. As well as signposting the international
standards and governance processes the Chinese government could encourage Chinese
organisations to participate for as experts in working groups and on governance bodies.
• Broadening the discussion to include companies from other emerging economies.
Companies from many countries are bringing their own conceptions of corporate
responsibility to Africa. India’s Tata Corporation for example brings its long tradition of
philanthropic corporate responsibility to its operations in nine African countries. Brazil’s
Vale has sought to develop a robust, global approach to sustainability that is aligned to its
business strategy, and integrated into its management systems. Opportunities for
South‐to‐South learning on CSR should be pursued.
Overall participants reflected on agenda for
further research, learning and collaboration that
would yield benefits for Chinese, African and
Western businesses and stakeholders. A very
concrete proposal which received strong general
approval was that next year a meeting should be
held in Africa to bring together practitioners from
all sides to continue to advance this agenda.
“Chinese companies should participate and learn
from international rules and norms. China needs
to open further. China will be a very important
economy in the future. We need to participate in
the drafting of international rules and norms,
and be responsible for the rule making process
and for promotion so that others understand the
CSR practiced by Chinese companies.”
Dr Chen Xiaohong, DirectorGeneral, DRCERI
“We have talked of the Chinese model of CSR and
the international model. We have to consider the
African model. Development starts at home. It
has to start with African priorities. It has to be
embedded in a long term framework that
governments come forward with. That is the
journey that we are starting.”
Adama Gaye, Africa China Consulting Group.
CORPORATE RESPONSIBILITY IN AFRICAN DEVELOPMENT
39
CONFERENCE PARTICIPANTS
Jennifer, Adams, US Government
Motoko, Aizawa, International Finance Corp.
Gaye, Adama, Africa China Consulting Group
Li, Anshan, Peking University
Humphrey, Assisi Asobie, EITI, Nigeria
Toni, Aubynn, Goldfields
Yang , Baorong, CASS ‐‐ IWASS
Gunnvor, Berge, Government of Norway
SuTingting, China Industrial Bank
Zhao, Changhui, Ex‐Im Bank of China
Lu, Chunming, Holley Cotec
An , Chunying, CASS ‐‐ IWASS
Zhang , Chunyu, CASS ‐‐ IWASS
Robert, Court, Rio Tinto
Martyn, Davis, Gordan Business School
Adrian, Davis, Dfid
Paulo, De Sa, World Bank
Rolf, Dietmar, GTZ
Pei, Difei, CFAU
Hugh, Elliott, Anglo‐American
Maya, Forstater, Independent
Matthew, Genasci, RWI
Mark, George, DFID
Sean, Gilbert, Global Reporting Initiative
Yang, Guang, CASS ‐‐ IWASS
Yao, Guimei, CASS ‐‐ IWASS
Liu, Hansong, China Enterprise Confederation
Jon, Hobbs, WWF
Fan, Hongfu, ZTE Corporation
Zhang, Hongming, CASS ‐‐ IWASS
Qin, Iris, Anglo‐American (China)
Ma, Jianrong, Lenovo
Guo, Jing, WWF
Piao , Yingji, CASS ‐‐ IWASS
Wang , Jinglie, CASS ‐‐ IWASS
Shi, Jingui, China State Farms
Cai, Jinniu, China‐Africa Development Fund
Ge, Kaiyong, China‐Africa Business Council
Phil, Karp, World Bank Institute
Martin, Kasekende, Confederation of
Ugandan Employers.
Yang, Lidan, SinoSteel
May, Kevin, OxfamWilliam, Kingsmill, World
Bank
Yang , Lihua, CASS ‐‐ IWASS
Wang , lincong , CASS ‐‐ IWASS
Shaffi, Manafa, Conf. of Ugandan Empl.
Chen, Mo, CASS ‐‐ IWASS
Jonas, Moberg, EITI
Mohamed Fayez Farahat, Egypt
Alistair , Monument, Forest Stewardship
Coucil, China
Alistair , Morgan, UK Embassy
Wang, Nan, People's Daily
Jing, Ning, MOFCOM
Francisco, Paris, EITI
Zhao, Ping, Oxfam
Zeng, Qiang, China Institute of
Comtemporary International Relations
Tina, Redshaw, UK Embassy
Pan , Rixia, CASS ‐‐ IWASS
Simon, Sharpe, European Union
Andy, Shaw, US Government
Zhan, Shiming , CASS ‐‐ IWASS
Erik, Svedahl, Government of Norway
Meng, Tina, Anglo‐American (China)
T. Negbalee, Warner, EITI
Tian, Wei, CCTV 9
Zhang, Weiping, CNOOC
Xu, Weizhong, China Institute of
Comtemporary International Relations
Li, Wen, CNPC Research Institute of
Economics and Technology
Wang, Wenming, Africainvest.net
CORPORATE RESPONSIBILITY IN AFRICAN DEVELOPMENT
40
He, Wenping, CASS ‐‐ IWASS
Jiang, Wenran, University of Alberta
Sebastian, Wood, UK Embassy
Chen, Xiaohong, Development Research
Center of the State Coucil
Liang, Xiaohui, CNTAC
Zhou, Xiaojing, Development Research
Center of the State Coucil
Chen, Xiaowei, China Export&Criedit
Insurance Corp
Hou Jie, SASAC
Shi, Xiaoxi, CASS ‐‐ IWASS
Li, Yao, IFC
Wang, Ying, HSBC
Chen, Ying, UN Global Compact China
Network
Jiang, Yingmei, CASS ‐‐ IWASS
Hong, Yonghong, Hunan Xiangtan University
Zhang, Yongpeng, CASS ‐‐ IWASS
Liu, Youfa, China Institute of International
Studies
Kelly, Yu, Independent
Xiao, Yuhua, Zhejiang Normal University
Simon, Zadek, IISD/Harvard
Li, Zhibiao, CASS ‐‐ IWASS
Zhao Chong ‐‐ ICBC
CORPORATE RESPONSIBILITY IN AFRICAN DEVELOPMENT
41
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ENDNOTES
1 Commission on Growth(2008) The Growth Report: Strategies for Sustained Growth and Inclusive
Development, World Bank
2 Commission on Growth (2008) op cit.
3 Commission on the Private Sector and Development (2004) Unleashing Entrepreneurship: Making
Business Work for the Poor, Report to the Secretary‐General of the United Nations, UNDP, New York.
4 UNECA/ADB/African Union (2009) Assessing Progress in Africa toward the Millennium
Development Goals, MDG Report 2009
5 Africa Progress Panel (2009) INCREASING THE ROLE OF BUSINESS IN ACHIEVING THE MDGS IN AFRICA
PART TWO: POSSIBLE PATHWAYS FORWARD
6 Ramamurti, R and Singh, J (Eds) (2009) Emerging Multinationals in Emerging Markets, Cambridge
University Press
7 Cotula, L, Vermeulen, S, Leonard, R and Keeley, J (2009) Land grab or development opportunity?
Agricultural investment and international land deals in Africa, IIED/FAO.
8 Calculated on the basis of the Statistical Bulletin of China's Outward Foreign Direct Investment, 2007
9 Foster, V, Butterfield, W, Chen, C and Pushak, N(2007) Building Bridges: China’s Growing Role as
Infrastructure Financier for Sub‐Saharan Africa World Bank – Public‐Private Infrastructure Advisory
Facility.
10 Zadek, S, Chen, X, Zhaoxi,L, Tao,J, Yan, Z, Yu, K, Forstater, M and Morgan, G (2009) Responsible Business
in Africa Chinese Business Leaders’ Perspectives on Performance and Enhancement Opportunities,
AccountAbility/ Development Research Center of the State Councilof the People’s Republic of China
11 Gu, J. (2009) 'China's Private Enterprises in Africa and the Implications for African Development',
European Journal of Development Research, Special Issue on China, India and Africa 21.4:570‐87
12 Foster, V, Butterfield, W, Chen, C and Pushak, N(2007) Building Bridges: China’s Growing Role
asInfrastructure Financier for Sub‐Saharan Africa World Bank – Public‐Private Infrastructure Advisory
Facility.
13 African Progress panel (2009) China’s Growing Engagement in Africa. Contexts, Trends, Potential.
14 Brautigam, D (2010) The Dragon’s Gift: The Real Story of China in Africa
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52
15 See for example, Karl, TL (1997) The Paradox of Plenty: Oil Booms and Petro‐States, University of
California Press, Berkley, Collier, P (2003) Natural Resources, Development and Conflict: Channels of
causation and Policy Interventions, World Bank, Khodeli, I (2005) From Curse to Blessing? Using Natural
Resources to Fuel Sustainable Development, International Social Science Journal, Vol 57, Issue 1, and
Leite, C and Weidmann J (1999) Does Mother Nature Corrupt? Natural Resources, Corruption, and
Economic Growth, IMF Working Paper WP/99/85
16 Brautigam, D, Fjeldstad, O and Moore, M (2008) Taxation and State Building in Developing
Countries, Cambridge University Press
17 See for example Shuao, S and Zhiong‐ying, Q (2009) Energy exploitation and economic growth in
western China: An empirical analysis based on the resource curse hypothesis, Frontiers of Economics,
in China 4, no. 1, March 2009 and Zhang, X, Xing, L, Fan, S and Luo, X (2007) Resource Abundance and
Regional Development in China, Discussion Paper 00713, August, 2007.
18 Shankleman, J (2009)Going Global: Chinese Oil and Mining Companies and the Governance of Resource
Wealth, Woodrow Wilson Center for International Scholars.
19 See Dahlsrud, A (2006) How Corporate Social Responsibility is defined: an analysis of 37 definitions,
Corporate Social Responsibility and Environmental Management, Wiley Science and Carroll, A. B.
(1991). "The Pyramid of Corporate Social Responsibility: Toward the Moral Management of
Organizational Stakeholders." Business Horizons 34: 39‐48.
20 SASAC (2009) Guidelines to the State‐owned Enterprises Directly under the Central Government on
Fulfilling Corporate Social Responsibilities, SASAC, PRC.
21 UK Department of Business, Innovation and Skills
http://www.bis.gov.uk/policies/business‐sectors/low‐carbon‐business‐opportunities/sustainable‐devel
opment/corporate‐responsibility Accessed 11/04/10
22 Jørgensen, H.B., Pruzan‐Jørgensen, P.M, Jungk, M and Cramer, A (2003) Strengthening Implementation
Corporate Social Responsibility In Global Supply Chains, World Bank CSR Practice.
23 Zadek, S (2001) The Civil Corporation: The new economy of corporate citizenship, Earthscan.
24 Cowe, R (2002) Developing Value: The business case for sustainability in
emerging markets, IFC/Sustainability.
25 WBDSD (2008) From Challenge to Opportunity: The role of business in tomorrow's society, WBCSD.
26 Zadek, S. (2001). The civil corporation: The new economy of corporate citizenship. London: Earthscan.
27 Idowu, S and Filho, W. Eds. (2009) Global Practices of Corporate Social Responsibility, Springer.
28 UNGC/Accenture (2010)
CORPORATE RESPONSIBILITY IN AFRICAN DEVELOPMENT
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29 Visser, W, McIntosh, M and Middleton (Eds.), Corporate Citizenship in Africa: Lessons from the Past;
Paths to the Future, Greenleaf, 2006
30 GTZ (2009) Built‐in or bolted‐on Corporate Social Responsibility in sub‐Saharan Africa, A survey on
promoting and hindering factors
31 Kivuitu,M, Yambayamba, K and Fox, T, How can Corporate Social Responsibility Deliver in Africa?
Insights from Kenya and Zambia, IIED.
32 Zadek, S, Chen, X, Zhaoxi,L, Tao,J, Yan, Z, Yu, K, Forstater, M and Morgan, G (2009) Responsible Business
in Africa Chinese Business Leaders’ Perspectives on Performance and Enhancement Opportunities,
AccountAbility/DRC.
33 SASAC, (2009) CSR Guidelines for State‐Owned Enterprises,‐ unofficial and shortened translation by
Guo Peiyuan, SynTao.
34 Sinosteel Corporation (2008) Africa Social Responsibility Report.
35 MOFCOM (2007) Press Release.
36 Shankleman, J (2009)Going Global: Chinese Oil and Mining Companies and the Governance of Resource
Wealth, Woodrow Wilson Center for International Scholars.
37 Zadek, S, Chen, X, Zhaoxi,L, Tao,J, Yan, Z, Yu, K, Forstater, M and Morgan, G (2009)op cit.
38 See for example ICMM/World Bank/ESMAP(2005) Community Development Toolkit, ICMM.
39 Zadek, S (2008) COLLABORATIVE GOVERNANCE: THE NEW MULTILATERALISM FOR THE 21ST CENTURY,
Brookings Insititute.
40 Litovsky, A, Rochlin, S, Zadek, S and Levy, B (2007) Investing in Standards for Sustainable Development:
The Role of International Development Agencies in Supporting Collaborative, AccountAbility, London
41 UN Global Compact (2008) Local Network Report 2008: Deepening Engagement at the Local Level
42 CHANDRANAYAGAM, D (2009) Nigeria: Legislating CSR, CSR Digest, March 2, 2009
43 ISO (2006) Participating in the future International Standard ISO 26000 on Social Responsibility
44 Brenthurst Foundation (2010) THE MONROVIA PRINCIPLES: A Guideline For Corporate Social
Responsibility In Africa, Discussion Paper 2010 / 01
45 Guoqiang, L, Zadek, S and Wickerham, J (2009) Advancing Sustainable Competitiveness of China’s
Transnational Corporations, AccountAbility/ Development Research Center of the State Council of the
People’s Republic of China.
46 Also see Eads, C and Krakenes, A (Eds) (2010)I MPACT OF EITI IN AFRICA: Stories from the ground, EITI.
47 Also see EITI (2009) EITI CASE STUDY Addressing the roots of Liberia’s conflict through EITI